2021 NEW FHA Max Loan Limits ($24,602 Increase)

Certified Mortgage Advisor
NMLS 1701021
December 4, 2020

FHA increased their loan limit!

In this video, we're going to talk about the almost $25,000 increase that FHA just put in on their 2021 loan amounts. So FHA just raised their maximum loan limit to $356,362. Now, this is the loan limit, not the purchase price. This is a $24,602 increase from 2020.

Why FHA increased their max loan limit?

So as home prices continue to rise, FHA is also increasing their maximum loan limit so people can afford these higher purchase prices.

Loan Limit Lookup

Now, here is the link for Loan Limit Lookup if you're in a high-cost FHA area because FHA basically separates by county high-cost areas and low-cost areas. The $356,362 is the standard floor for low-cost areas. So most of the United States and in the link again, that's going to be the loan limit lookup. Now that's for 2020, it won't flip over to 2021 until we get into this upcoming year.

So for the low-cost areas. There's one unit, two units, three units, and four units. Also, the high cost goes all the way up to $822,375 in these high-cost areas in on a four-unit that goes all the way up to 1.5, $8 million as a maximum loan that you can do with an FHA loan with the minimum three and a half percent down payment.

How the down payment correlates to the purchase price

So let's look at how the down payment correlates to the purchase price because the loan amount is just telling us again what our loan is. We can always put a down payment to increase the purchase price. So FHA has a minimum of 3.5% down. If you have a 580 credit score and above, if you have anywhere from a 500 to a 579 credit score, you'll need 10% down.

New vs. Old

The old limit is $331,760, you could purchase up to $343,792. With the new limit, your max loan is higher. Meaning your max purchase price goes all the way up to 369,287. So just under 370,000. And in high-cost areas, you can go all the way up to $850, 202 as a purchase price, a normal FHA loan with three and a half percent down.

Now, this is helpful in these high-cost areas. So you don't have to jump into these jumbo loans, which could be a lot more difficult to qualify for and require higher down payments than something like FHA.

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